At that time, the government will receive the revenue from the difference of Qb and Qdb multiplied by price Pb-Pa. The consumption will decrease because there is less of the product and the product is set a higher price. Indeed, foreign exporters will receive Qb-Qdb times Pa. The tariff is more effective the more elastic the demand curve is. In this case, the US's steel industry has to face with fierce competition with Japan, Russia, South Korea and Brazil, which leads to a loss of revenue for the US producers from Po*Qdo to Pa*Qda (Refer to Fig.2).
In this case, the profitability, turnover and return to the investors are less and this is the industrial trend. In this situation, an investor has to look into the liquidity ratio and into the debt ratio. When the profit earning capacity of the company is lesser in the industry, those company should not prefer to have higher debt as this will drain their entire liquidity and will add more pressure to the company. This will increase the chances of bankruptcy and financial distress costs too. In this regard Exxon has very poor liquidity and higher debt which is adding more risk on investment.
Per minute, America wastes $200,000 and per hour, $13 million by relying on it (Natural Resources Defense Council, p. 1). Gasoline consumption has led to an increase of costs of oil which is passed on to consumers at the pump, through more expensive goods and services, and in a weaker job market and lower stock prices (Natural Resources Defense Council, p. 3). Therefore, if current trends in oil demand and prices continue, economic impacts for the U.S. will intensify. It is possible for America to reduce its dependence on foreign oil, but the petroleum industries and other monopolies have paid Congress to take out the competition (Worthington, p. 1). Legal monopolies are targeting the market effects of foreign oil, which increases profits, while America’s government obliges them.
They usually produce more when demand more and subtract when demand reduce to control the price of oil. Anyway, speculator is another factor we have to consider in short run. From demand side of view, every country is trying to reduce the consumption on petroleum, the government use tax strategy to control the oil price. Further more, government strategic oil reserves have to be considered as a factor which causes oil supply shortage. Next, let¡¦s discuss in detail how the demand and supply relation affect the price of oil.
The production of oil is di... ... middle of paper ... ...tes over 60% will diminish any hopes of growth regardless of the size or financial strength of prospective firms. Reduced taxation is absolutely necessary for increased investment in Russia. In fact, by reducing taxes to virtually zero, Russia could inspire tremendous growth for several years. Once foreign firms are established and profitable with the aid of joint-venture with Russian companies, taxes can be sharply increased. In all, the Russian oil environment is extremely volatile and risky.
Because of the surplus of goods and falling prices consumption becomes more desirable to consumers and the level of consumer spending rises. The fall in prices causes business to become less profitable and producers decrease the level of production. This results in the decrease of the aggregate quantity supplied to decrease. This continues until aggregate quantity demanded equal the aggregate quantity supplied and a period of short- run equilibrium is established. The real GDP and the price level have both decreased from the original long-run equilibrium level and the economy is operating under the full employment level.
It also harmed some of the Kazakhstani producers who had previously used parts of the abroad outputs for their final goods as it became more expensive for them to buy due to higher external tariffs. Overall, Kazakhstani real return on capital has been put down by 0.6% and real wages by 0.5%. The Customs Union formation also leads to a loss of productivity gains for Kazakhstan in the long term, as the country trades less with the rest of the world and only focuses on the partnership in trade with Russia, Belorussia and the rest of the Commonwealth Independent States (CIS). Kazakhstan alienate the opportunity of beneficial trade as there will be less imported technology and innovations coming from technologically advanced European Union and other developed countries.
The outsourcing of jobs from United States of America is becoming a major threat to the American economy. Despite the substantial benefits of outsourcing, the increase in unemployment and the economy decline causes a major concern to the US government. But economists have cited many points that support outsourcing of jobs based on certain facts. If US companies do not outsource their jobs then foreign firms will produce cheaper goods and sell it to the US market. The demand curve is negatively sloped, so as the price of the substitute goods (3) that are outsourced gets low, the demand for the costlier US goods will come down.
When the Central Bank uses expansionary monetary policy, the money supply increases whilst the interest rates fall. This is because when money is readily available in the economy due to monetary expansion, the interest rates will fall due to the fact that people will be more willing to make loans as oppose to taking out loans. Reduced interest rates will cause domestic financial and capital assets to become less attractive as a result of their lower real rates of return. In addition to this, foreigners will reduce their position in domestic bonds, real estate, stocks and other assets. The financial account with deteriorate as a result of foreigners holding fewer domestic assets.
If the exchange rate increase to £1 to $1.7 it means that England will be making a loss as they wouldn’t buy anything different but the products are costing more money. They will then have to decide whether to have a loss or increase the prices of their products. By increasing the prices it means that England will have fewer sales.